When a couple are looking to divide their assets on divorce, it is always recommended that they should seek to distinguish between different classes of asset.
A good example of this is the approach taken to dividing pensions. It is common to bring about a pension division separately from the division of non-pension assets. This stems from the different character of a pension investment when compared with most other assets: at its core, a pension is an income stream rather than readily available cash. It is usually inaccessible until age 55, and has a distinct utility and valuation. They are to be distinguished from most non-pension assets, which are usually immediately available/sellable and provide cash, not an income stream.
There are other types of asset that are classed differently from cash. Where a substantial part of a couple’s non-pension capital is held in private company shares, options, deferred consideration or other types of asset that cannot readily be sold or realised, there can sometimes be a reluctance to recognise the need for a different treatment. Whilst such assets might have a substantial value on paper, they will often come with no immediate mechanism to realise cash. Their eventual value might be a good deal higher or lower than the figure adopted in the divorce. It might take years to realise funds from them or, in some cases, they may never be realised at all.
Whilst an asset division might appear equal on a balance sheet, if it leaves one spouse with cash and property and the other with most of the uncertainty, the division of risk is an uneven one.
Wells sharing
“Wells sharing”, deriving its name from Wells v Wells [2002] EWCA Civ 476, is a mechanism sometimes deployed in response to this problem. Rather than fixing a value and allocating the whole of the uncertain asset to one spouse, Wells sharing provides a means of dividing future receipts from the asset to avoid any imbalance. It would ensure both spouses participate in the future risk and reward in equal measure.
Where it was viewed by many (to include the judiciary) as a solution of last resort, Culligan corrects that perception and brings Wells sharing into the mainstream.
The Culligan case
The Court of Appeal’s decision in Culligan v Rosemin-Culligan [2026] EWCA Civ 948 provides important clarification on when and how to deploy the Wells solution. It rejects the suggestion that Wells sharing is permitted only as a “last resort” or that it must be confined to a minority part of an award. Importantly, it confirms that equal sharing requires the court to consider not only the attributed value of the assets, but also how risk, liquidity and uncertainty are shared between a couple.
Mr and Mrs Culligan had been married for around 40 years and their net assets were found to be worth just over £27 million. A substantial part of that wealth comprised the husband’s shares in Colendi Holdings Limited. The shares were valued at £19 million gross or approximately £13.7 million net of tax. That valuation was supported by transactions that occurred as part of a recent funding round. The expert evidence was that:
- the shares were not presently marketable;
- the husband could not extract any liquid capital from them;
- there was no current prospect of dividends;
- the timing of any future realisation was uncertain; and
- their future value remained subject to significant uncertainty.
At first instance, Mr Justice MacDonald divided the overall assets equally on paper, leaving each with approximately £13.7 million. Whilst the values had been divided, the risk profile each of the spouses took on was markedly different. The wife received approximately £9.5 million in liquid assets and £4.1 million in illiquid assets, whereas the husband received approximately £4.1 million in liquid assets and £9.6 million in illiquid assets.
Put another way, whilst there was a 50/50 division of value, there was a 70/30 of risk in favour of the wife. The judge gave credence to the wife’s argument that any contingent element of her award should be kept as small as possible. He also considered it fair that the husband should bear the larger part of the risk, having converted a relatively safe shareholding in SETL into an illiquid minority interest in Colendi without consulting the wife. The husband appealed.
The Court of Appeal decision
Lord Justice Moylan gave the lead judgment in the Court of Appeal, based around the central question as to whether the order achieved a fair balance of risk and illiquidity. It concluded that it did not. Three aspects of the decision were particularly important for practitioners faced with the same asset profile:
1. Wells sharing is not a remedy of last resort
The first instance judgment treated Versteegh v Versteegh [2018] EWCA Civ 1050 as establishing that Wells sharing should be a last resort and should comprise only a minority element of an award. The Court of Appeal held that this was incorrect, commenting that the “last resort” and “minority element” passages of Versteegh came from first instance decisions and did not form part of the Court of Appeal’s judgment in that case.
It follows that there is no rule that Wells sharing may be used only as a last resort, nor is there any rule that it must be limited to a minority part of an award. Whilst it should be approached with caution, Wells sharing is a tool capable of broader deployment if needed to achieve fairness.
2. A reliable valuation is not equivalent to cash
In Culligan, the Colendi valuation was based on an arm’s-length funding round and was treated as reliable. Even so, it remained a snapshot in time and did not eliminate uncertainty about the eventual amount the shares might realise.
Whilst a valuation of an unrealisable asset might be reliable enough to include in an asset schedule, it does not mean an order under which one spouse receives cash and the other retains the asset is necessarily fair. It is for the court to decide what weight is placed on a valuation when structuring the award. Assets have differing levels of risk and that difference must be taken into account when applying the sharing principle.
The key questions that are relevant to this exercise are going to be:
- Can the asset be sold? If so, when and on what terms?
- Does the asset generate income?
- Who controls decisions affecting the asset?
- What tax will arise on its realisation?
- Could the asset’s value change materially before an exit?
- Is the valuation supported by an actual transaction?
- Is a discount for illiquidity or minority status already reflected?
- Is there a realistic mechanism by which both spouses can share receipts?
3. Conduct findings cannot reappear through the structure of the award
At first instance, whilst it rejected the wife’s conduct arguments, the court regarded the absence of consultation about the SETL transaction as justification of leaving the husband with the greater share of the illiquid asset. The Court of Appeal regarded this as inconsistent and illogical. Lord Justice Moylan commented that if a matter does not cross the statutory conduct threshold, the court should be cautious about using the same behaviour to alter the composition of the award.
Outcome and practical impacts
The Court of Appeal concluded that there was no sufficient justification for dividing the economic benefit of the Colendi shares other than equally. The wife’s entitlement to future Colendi proceeds was increased from 30% to 50%. That adjustment required a corresponding rebalancing of the liquid assets. The former matrimonial home was ordered to be sold, with the husband receiving 40.4% of the net sale proceeds.
Practical impact 1: Schedules
It is common for schedules to be produced and relied on in proceedings distilling the assets in a case and their value. This was formally adopted in proceedings through the Financial Remedies Court (FRC) Efficiency Statement issued on 11 January 2022, which introduced the ES2 Excel template for use in financial remedy proceedings, later revised by Peel J and HHJ Hess in July 2025. What all these template schedules fail to adequately capture is the differentiation in risk that does not conceal the varying levels of risk attaching to each asset class; contingent or deferred consideration; incentive arrangements; assets which generate income but cannot readily be sold or assets whose value depends on a future liquidity event. An additional layer to the standard ES2 presentation covering liquidity and risk analysis may be appropriate in some cases.
Practical impact 2: Expert evidence
Consideration should always be given to whether instructions to experts need to extend beyond the market value of the interest and the usual run of areas an expert might be asked to review. Depending on the case, they might extend to marketability; transfer restrictions; likely exit routes; dividend prospects; dependence on future funding; dilution; the effect of separating or ring-fencing part of a holding and the degree to which recent transactions are genuinely comparable.
Practical impact 3: Structure of offers/settlement
An offer expressed only as a percentage of total net assets may not properly engage with any disparity in risk. Where illiquid wealth exists, an effective offer might set out the proposed division of liquid/illiquid assets; how future increases and decreases in value will be shared; whether tax is deducted before calculating the other party’s entitlement; what information must be provided whilst the Wells sharing is running; what happens on a sale, restructuring, dilution, exchange or conversion; how non-cash benefits are treated; and the proposed security and enforcement arrangements.
Conclusion
Section 25A requires the court to consider whether a clean break can fairly be achieved, however the Culligan judgment makes it clear that this requirement should not override the need for fairness. As earlier authorities have put it, fairness should not be sacrificed for finality.
The husband held approximately 3.6% of Colendi. His involvement in SETL gave him greater access to information than the wife, but his minority holding limited his ability to control Colendi or manipulate the investment. The Court of Appeal considered that asymmetry but did not regard it as sufficient to justify a 70:30 division of the risk.
The Culligan judgment confirms that the Wells approach is more readily available than first thought, and that should not be considered an option of last resort. Similarly, it does not establish a presumption that every illiquid asset should be shared in specie or through future receipts. It does not mean risk must always be shared equally or that a spouse must receive shares in a company managed by the other spouse.
What the judgment establishes is that where a material part of the matrimonial wealth is illiquid, non-realisable or exposed to significant future uncertainty, the court must examine who should carry that uncertainty. A spouse should not ordinarily receive most of the cash and property while the other receives most of the paper value unless there is a well-reasoned and evidential basis for that outcome.
Wells sharing is one of several structures available to the court. Its use depends on the nature of the asset, the reliability and limitations of the valuation, its liquidity and prospects of realisation, and the extent to which continuing financial links can be managed.
If you wish to discuss anything mentioned in this article, please contact our Family Law team.